Mr. Dan Daviau reports

CANACCORD GENUITY GROUP INC. REPORTS THIRD QUARTER FISCAL 2016 RESULTS

During the third quarter of fiscal 2016, the quarter ended Dec. 31, 2015, Canaccord Genuity Group Inc. generated $181.8-million in revenue. Excluding significant items, the company recorded a net loss of $19.1-million or a net loss of $22.2-million attributable to common shareholders (a loss per common share of 25 cents). These results include certain charges for impairment of an investment in Canadian First Financial Group Inc. and a software development impairment charge in the total amount of $6.3-million as further described below.

During the quarter, the company also recorded, as significant items, an impairment charge to the carrying value of its goodwill and other assets in the amount of $321.0-million, and restructuring charges of $4.3-million. Including the goodwill and other assets impairment charge, the restructuring expenses, and other significant items (amortization of intangible assets acquired in connection with a business combination), on an IFRS (international financial reporting standards) basis, the company recorded a net loss of $346.4-million or a net loss attributable to common shareholders of $349.3-million (a loss per common share of $3.91).

"A number of cyclical factors in the broader economy continued to put pressure on revenue and negatively impacted our third quarter performance," said Dan Daviau, president and chief executive officer of Canaccord Genuity Group. "We are making significant progress to reposition our business, with a strategy that is centred around improving our operational efficiencies and better aligning our core strengths, so that we can return to profitability and steadily improve our bottom line returns."

As referred to above, in addition to the recurring significant item related to amortization of intangible assets acquired in connection with a business combination, the following significant items were recorded during the third quarter of fiscal 2016.

Impairment of goodwill and other assets

Canaccord Genuity, the company's capital markets division, provides sales and trading, research, advisory, and corporate finance services, to institutional and corporate clients in the United Kingdom and Europe, Canada, the United States, and in the Asia-Pacific region. Due to the combined effect of weak equity market conditions globally and in each of the company's principal operating regions, these reporting units have experienced declines in business activity, revenue and profitability. With these adverse changes in the business environment, continued weakness in commodity prices and a challenging outlook through calendar 2016, as negative economic conditions persist, it was determined that the carrying value in each of the company's capital markets business units exceeded their fair values as determined in accordance with applicable accounting standards (an exit price as of Dec. 31, 2015, under market conditions as at that date). This determination resulted in the recognition of a non-cash charge for the impairment of goodwill and other assets related to these reporting units of $321.0-million. These impairment charges will have no impact on regulatory capital or on the continuing operations of these business units.

Restructuring costs

The company has implemented a restructuring program that will reduce capital markets and infrastructure staff in Canada, the U.K. and the U.S. The third quarter 2016 charges recorded in connection with this restructuring program were $4.3-million. Costs associated with the closure of the company's office in Barbados have also been included in the restructuring charges recorded during the quarter. It is expected that an additional restructuring charge of approximately $14.0-million will be recorded in the fourth quarter of 2016. With this restructuring program, overall head count is expected to be reduced by approximately 125 or 12 per cent of the capital markets and infrastructure staff in Canada, the U.K. and the U.S. (7 per cent of staff firm-wide).

In addition to the significant items recorded above, during the quarter, the company also recorded charges in respect of the following:

Incentive compensation

With the weak market conditions experienced through fiscal 2016, certain incentive compensation pools as recorded under the company's normal methodology were determined to be lower than would be required to provide necessary compensation to selective key production staff and, as a result of adjustments to these pools, the company's compensation expense as a percentage of revenue was higher than in previous fiscal periods. It is expected that this higher compensation ratio will continue through the fourth quarter of fiscal 2016.

Software development

A decision was made during the quarter to choose an alternative solution in connection with certain software development projects, which led to a charge of $2.3-million. This charge was recorded as a development cost.

Canadian First Financial Group Inc.

In fiscal 2014, the company made an investment in Canadian First Financial Group, a financial services firm that operates a number of financial centres in Canada, offering mortgage and other financial services to retail customers. During the quarter, the company made a determination that the fair value of its investment in Canadian First Financial exceeded its carrying cost and, as a result, a charge of $4.0-million was recorded under principal trading revenue during the quarter.

In response to the current business conditions and economic climate, the company is undertaking a thorough review of its operations and cost structure. With the restructuring program and head count reductions described above, and other cost savings initiatives, the company has identified more than $30-million of annual costs savings that it expects to realize through fiscal 2017. Approximately $10-million in respect of general and administrative expenses, including promotion and travel, communications and technology, and trading costs, has been identified, and approximately $20-million in respect of savings in compensation expense is expected to be realized as a result of the restructuring program described above.

Third quarter of fiscal 2016, versus third quarter of fiscal 2015:

• Revenue of $181.8-million, an increase of 9 per cent or $15.4-million from $166.5-million;
• Excluding significant items, expenses of $204.2-million, an increase of 11 per cent or $20.1-million from $184.1-million;
• Expenses of $532.5-million, an increase of 177 per cent or $340.5-million from $192.0-million;
• Excluding significant items, loss per common share of 25 cents, compared with a loss per common share of 19 cents;
• Excluding significant items, net loss of $19.1-million, compared with a net loss of $14.3-million;
• Net loss of $346.4-million, compared with a net loss of $21.5-million;
• Loss per common share of $3.91, compared with a loss per common share of 27 cents.

Third quarter of fiscal 2016, versus second quarter of fiscal 2016:

• Revenue of $181.8-million, a decrease of 5 per cent or $8.8-million from $190.6-million;
• Excluding significant items, expenses of $204.2-million, an increase of 10 per cent or $18.0-million from $186.2-million;
• Expenses of $532.5-million, an increase of 182 per cent or $343.4-million from $189.1-million;
• Excluding significant items, loss per common share of 25 cents, compared with a loss per common share of one cent;
• Excluding significant items, net loss of $19.1-million, compared with a net income of $1.9-million;
• Net loss of $346.4-million, compared with a net loss of $400,000;
• Loss per common share of $3.91, compared with a loss per common share of three cents.

Year to date in fiscal 2016, versus year to date in fiscal 2015 (nine months ended Dec. 31, 2015, versus nine months ended Dec. 31, 2014):

• Revenue of $586.9-million, a decrease of 10 per cent or $61.4-million from $648.3-million;
• Excluding significant items, expenses of $589.6-million, a decrease of 3 per cent or $17.8-million from $607.4-million;
• Expenses of $923.6-million, an increase of 48 per cent or $298.0-million from $625.6-million;
• Excluding significant items, loss per common share of 15 cents, compared with diluted earnings per share (EPS) of 20 cents;
• Excluding significant items, net loss of $2.7-million, compared with net income of $40.9-million;
• Net loss of $335.9-million, compared with net income of $15.0-million;
• Loss per common share of $3.78, compared with diluted EPS of five cents.

Financial condition at the end of the third quarter of fiscal 2016, versus the fourth quarter of fiscal 2015:

• Cash and cash equivalents balance of $413.6-million, an increase of $91.3-million from $322.3-million;
• Working capital of $408.3-million, a decrease of $18.9-million from $427.2-million;
• Total shareholders' equity of $789.2-million, a decrease of $328.3-million from $1.12-billion;
• Book value per diluted common share of $5.33, a decrease of $3.38 from $8.71.

On Feb. 11, 2016, the board of directors considered the company's dividend policy in the context of the market environment and Canaccord's business activity, and approved a suspension of the quarterly common dividend. This suspension will be reviewed quarterly, and a determination made on the basis of business conditions and profitability.

On Feb. 11, 2016, the board of directors also approved a cash dividend of 34.375 cents per Series A preferred share, payable on March 31, 2016, with a record date of March 18, 2016, and a cash dividend of 35.9375 cents per Series C preferred share, payable on March 31, 2016, to Series C preferred shareholders of record as at March 18, 2016.

Summary of operations

Corporate

On Aug. 4, 2015, the board of directors approved the filing of an application to renew the normal course issuer bid (NCIB) to provide for the ability to purchase, at the company's discretion, up to a maximum of 5,163,737 common shares through the facilities of the Toronto Stock Exchange and on alternative trading systems during the period from Aug. 13, 2015, to Aug. 12, 2016. The purpose of any purchases under this program is to enable the company to acquire shares for cancellation. The maximum number of shares that may be purchased represents 5.0 per cent of the company's outstanding common shares. A total of 624,350 shares have been purchased and cancelled under the terms of the NCIB during the nine months ended Dec. 31, 2015.

In light of current market conditions, the company determined that the company's office in Barbados was no longer required and, accordingly, that office was closed during the quarter.

Capital markets

Canaccord Genuity participated in 47 transactions globally, raising total proceeds of $11.9-billion (Canadian) during the third quarter of fiscal 2016.

Canaccord Genuity led or co-led in 13 transactions globally, raising total proceeds of $930-million (Canadian) during the third quarter of fiscal 2016.

Significant investment banking transactions for Canaccord Genuity during the third quarter of fiscal 2016 include:

• 2.45 billion pounds sterling for Worldpay Group PLC on the London Stock Exchange;
• $531.3-million (U.S.) for Atlassian Corporation PLC on the Nasdaq Stock Market;
• $460.1-million (Canadian) for Pembina Pipeline Corp. on the TSX;
• $300.0-million (Canadian) for National Bank of Canada on the TSX;
• $250.3-million for Canadian Apartment Properties REIT on the TSX;
• $200.0-million (Canadian) for AltaGas Ltd. on the TSX;
• 121-million-pound-sterling sell-down for Paysafe Group PLC on the LSE;
• 78 million pounds sterling for the Renewables Infrastructure Group on the LSE;
• $104.3-million sell-down for Cara Operations Ltd. on the TSX;
• $86.3-million (U.S.) for Advanced Accelerator Applications S.A. on the Nasdaq;
• $72.9-million (U.S.) for Dimension Therapeutics Inc. on the Nasdaq;
• 51.0 million pounds sterling for HICL Infrastructure Company Ltd. on the LSE;
• $69.0-million sell-down for Pine Cliff Energy Ltd. on the TSX Venture Exchange;
• $53.5-million sell-down for NorthWest Healthcare Properties Real Estate Investment Trust on the TSX;
• $40.3-million sell-down for Dalradian Resources Inc. on the TSX;
• $36.0-million (U.S.) for T2 Biosystems, Inc. on the Nasdaq;
• $32.0-million (Australian) for Starpharma Holdings Ltd. on the Australian Securities Exchange;
• $18.4-million (Singaporean) for Asia-Pacific Strategic Investments Ltd. on the Singapore Exchange;
• $18.0-million (Australian) for LatAm Autos Ltd. on the ASX.

In Canada, Canaccord Genuity participated in raising $198.0-million for government and corporate bond issuances during the third quarter of fiscal 2016.

Canaccord Genuity generated advisory revenues of $37.8-million during the third quarter of fiscal 2016, an increase of $15.2-million or 67 per cent compared with the same quarter last year.

During the third quarter of fiscal 2016, significant merger and acquisition transactions, and advisory transactions, included:

• Ashley Park Financial Services Corp. on its cross-border debt financing;
• Amica Mature Lifestyles Inc. on its $986-million (Canadian) sale to BayBridge Seniors Housing Inc.;
• Corsair Capital and Palamon Capital Partners on the acquisition of Currencies Direct;
• Ephesus Lighting Inc. on its sale to Eaton Corporation PLC;
• American Eagle Energy on its sale to Resource Energy Can-AM LLC;
• Linxens SAS in the 1.5-billion-euro sale to CVC Capital Partners from Astorg Partners;
• Investcorp, through its investment vehicle, Orca Bidco Ltd., in the 66.7-million-pound-sterling acquisition of OpSec Security Group PLC;
• Response Genetics Inc. on its sale to Cancer Genetics Inc.;
• Retroficiency Inc. on its sale to Ecova Inc.

Canaccord Genuity Wealth Management (global)

Globally, Canaccord Genuity Wealth Management generated $61.8-million in revenue in the third quarter of 2016.

Assets under administration in Canada, and assets under management in the U.K. and Europe, and Australia, were $34.4-billion at the end of the third quarter of 2016.

Canaccord Genuity Wealth Management (North America)

Canaccord Genuity Wealth Management (North America) generated $25.6-million in revenue and, after intersegment allocations and before taxes, recorded a net loss of $2.4-million in the third quarter of 2016.

Assets under administration in Canada were $9.04-billion as at Dec. 31, 2015, a decrease of 5 per cent from $9.48-billion at the end of the previous quarter and a decrease of 12 per cent from $10.31-billion at the end of the third quarter of fiscal 2015.

Assets under management in Canada (discretionary) were $1.26-billion as at Dec. 31, 2015, a decrease of 7 per cent from $1.36-billion at the end of the previous quarter and a decrease of 12 per cent from $1.44-billion at the end of the third quarter of fiscal 2015.

Canaccord Genuity Wealth Management had 140 advisory teams, a decrease of one advisory team from Sept. 30, 2015, and a decrease of 21 teams from Dec. 31, 2014

Canaccord Genuity Wealth Management (U.K. and Europe)

Wealth management operations in the U.K. and Europe generated $35.0-million in revenue and, after intersegment allocations and excluding significant items, recorded net income of $6.5-million before taxes in the third quarter of fiscal 2016.

Assets under management (discretionary and non-discretionary) were $24.5-billion (11.9 billion pounds sterling) as at Dec. 31, 2015, an increase of 7 per cent from $22.9-billion (11.4 billion pounds sterling) at the end of the previous quarter and an increase of 21 per cent from $20.3-billion (11.2 billion pounds sterling) from Dec. 31, 2014. In local currency (pounds sterling), these increases were 4 per cent and 6 per cent, respectively.

                      SELECTED FINANCIAL INFORMATION, EXCLUDING SIGNIFICANT ITEMS
                      (in thousands of Canadian dollars, except per-share amounts)

                                                        Three months ended Dec. 31,   Nine months ended Dec. 31,
                                                              2015            2014         2015            2014

Total revenue per IFRS                                  $  181,837      $  166,471   $  586,893      $  648,298
Total expenses per IFRS                                    532,456         191,991      923,566         625,585
Significant items recorded in Canaccord Genuity   
Amortization of intangible assets                            1,333           1,684        4,063           5,132
Impairment of goodwill and other assets                    321,037           4,535      321,037           4,535
Restructuring costs                                          2,977               -        2,977               -
Significant items recorded in Canaccord Genuity                                        
Wealth management                                                                       
Amortization of intangible assets                            1,560           1,660        4,584           6,124
Restructuring costs                                              -               -            -             783
Significant items recorded in corporate and other      
Restructuring costs                                          1,300               -        1,300           1,600
Total significant items                                    328,207           7,879      333,961          18,174
Total expenses excluding significant items                 204,249         184,112      589,605         607,411
Net (loss) income before taxes, adjusted                   (22,412)        (17,641)      (2,712)         40,887
Income taxes (recovery), adjusted                           (3,268)         (3,388)       1,170          10,377
Net (loss) income, adjusted                                (19,144)        (14,253)      (3,882)         30,510
(Loss) earnings per common share, basic, adjusted       $    (0.25)     $    (0.19)  $    (0.15)     $     0.21
(Loss) earnings per common share, diluted, adjusted     $    (0.25)     $    (0.19)  $    (0.15)     $     0.20

Message to shareholders

During the third quarter of fiscal 2016, numerous cyclical factors and persistent broad market volatility materially impacted the company's industry and continued to put pressure on activity levels in many areas of the business. While Canaccord Genuity has announced restructuring measures, its continues to use this period productively, to reposition its global operations for long-term success.

For the third quarter of fiscal 2016, Canaccord Genuity earned revenue of $181.8-million. Excluding significant items, the company recorded a net loss of $19.1-million, which translated into a loss per common share of 25 cents. While revenues for the period increased by $15.4-million, or 9 per cent, when compared with the same period last year, the net loss was primarily attributable to certain software development charges, an impairment loss in the investment in Canadian First Financial Group and higher compensation expenses as a percentage of revenue.

From 2010 to 2012, Canaccord Genuity made strategic acquisitions which have helped the company successfully expand its global footprint and deliver differentiated service levels for its clients. Since that period, changes in global economic conditions led to operating losses and reduced revenue forecasts, such that the company incurred goodwill impairment charges of $321.0-million with respect to its global capital markets operations. Canaccord Genuity continues to see material value in these operations over a cycle, however, accounting standards require a fair value test during a time that the company perceives to be the bottom of a cycle.

The performance Canaccord Genuity is reporting today is not what it is accustomed to seeing for its industry or for its business. Importantly, it does not reflect the vision the company has going forward.

Positioning the business for stronger bottom line performance

Canaccord Genuity is moving aggressively to streamline its company and drive operating efficiencies. During the quarter, the company took steps to rationalize its global infrastructure and exit underperforming business lines, so that it can significantly reduce its fixed cost base and stabilize its business for the future. While these developments will negatively impact results in the near term, the company expects to realize over $30-million in annualized savings in the next fiscal year.

While the company's review of operations is still continuing, Canaccord Genuity has made steady progress in reducing general and administrative, communication and technology, and trading costs, across its operations. It has also taken steps to focus its business in the areas where it can achieve dominance as an independent mid-market global investment bank. As a result of these developments, approximately 125 professionals, or 12 per cent of the company's work force from front and back office operations in the Canadian, U.S., and U.K. and Europe capital markets businesses, have left or will be leaving the firm under various termination arrangements throughout the remainder of fiscal 2016.

Following a careful review of the impact the market environment has had on the company's business activity, the board of directors made the prudent decision to suspend its quarterly common share dividend. The board remains committed to returning capital to the company's shareholders, and looks forward to reinstating this dividend payment under more positive market conditions and when profitability returns.

It believes these actions are in the best interests of the company and its shareholders. Looking ahead, the board expects to maximize shareholder value by creating a more efficient and aligned global business, while making disciplined investments in the company's key focus areas so that it can optimize client relationships and provide meaningful opportunities for employees.

Aligning global capital markets operations to improve cross-border capabilities and return to profitability

In the third quarter of fiscal 2016, Canaccord Genuity participated in 60 transactions and raised total proceeds of $12.8-billion for its clients.

Revenues for the its capital markets business were $122.1-million, an increase of 18 per cent from the same period a year ago, with the strongest contribution coming from its U.S. operations, driven mainly by higher advisory and principal trading activity. Global advisory fees increased by $15.2-million, or 67 per cent, compared with the same period last year, with the most significant contribution from the company's Canadian operations. Market conditions continued to challenge investment banking activity during the quarter and revenues for this segment of the company's global capital markets business were 24 per cent lower on a year-over-year basis.

The company's Canadian capital markets division experienced the most notable year-over-year decline in investment banking activity and recorded a 34-per-cent drop in revenues during the third quarter of fiscal 2016. While ECM activity in the region hit its lowest level since 2001, Canaccord Genuity retained its position as the top independent bookrunner in the region for the 2015 calendar year. Looking ahead, the company will continue to leverage its strategic position in this market to deliver on its mission to be the dominant independent investment bank in Canada.

Revenue in the company's U.K. and Europe operations increased by 24 per cent on a year-over-year basis, driven by higher advisory and principal trading activity. This performance was offset by higher expense levels primarily related to compensation expense. Subsequent to the quarter, the company took steps to focus its operations and better align this business to become a stronger, long-term contributor to its global franchise. The restructuring initiatives it announced today will create a leaner, more focused mid-market securities and investment banking business, capable of delivering stronger returns in the next fiscal year.

Quest, Canaccord Genuity's proprietary offering of on-line analytical tools, valuation models and market commentary, will soon be rolled out internationally. Based on the success of the initial launch in the U.K. and Europe earlier this year, the company expects this to provide opportunities for revenue growth and a valuable tool for enhancing its client relationships.

Revenue in the company's Asia-Pacific capital markets business increased by 15 per cent, predominantly driven by increased business activity in the Australian operations. This business has steadily improved its performance since Canaccord Genuity's initial investment in 2011. Looking ahead, the company expects to be able to leverage the strength of its diversified Australian capital markets business to further integrate these operations and improve its strength in the region.

While the market environment continues to impact activity levels in the company's capital markets business, Canaccord Genuity is working to align its core offerings across its global operations with a focus on cross-selling opportunities, which will deepen its relationships with top-tier clients and, ultimately, strengthen its profitability. The company is also fortunate to have cultivated a pipeline of activity in all of its primary markets and is well positioned to successfully execute on these mandates when market conditions permit.

Wealth management

Globally, Canaccord Genuity Wealth Management generated revenue of $61.8-million during the quarter.

While the company continues to experience growth in its fee-based and proprietary asset management offerings, the continuing weakness in investment banking activity continues to put pressure on commissions and fees for Canaccord Genuity's Canadian wealth management business, a key distribution channel for the company's capital markets transactions. Despite challenging market conditions, Canaccord Genuity maintains a strong focus on attracting and retaining high-quality advisers, investing in training programs, and building a comprehensive suite of high-quality products to help advisers grow their businesses.

In the U.K. wealth management business, the company continues to attract new assets, which directly support its recurring revenue growth. Client holdings in the in-house investment management products exceed $1-billion, and are attracting growing interest from domestic intermediaries and international fund companies. Additionally, the company is increasingly attracting established and reputable professionals to its differentiated platform, and has welcomed three senior advisers to its London and Isle of Man wealth management operations during the quarter. Canaccord Genuity continues to actively review opportunities to strategically expand this business to improve its contribution to its performance.

Strengthening alignment with shareholders to improve net income focus

Canaccord Genuity's independence provides a level of agility in its business that allows the company to stay competitive and exceed its clients' expectations, while adjusting to new market realities.

Reducing costs is an important priority. The company remains diligent on expenses and is carefully reviewing its staffing mix, to ensure that its business is appropriately positioned for success in its operating environment. With an enhanced leadership team in place, Canaccord Genuity is actively examining additional opportunities to improve efficiencies across its organization. Its renewed commitment to managing costs is not in response to the changes in its operating environment; this is quite simply how the company intends to manage its business from now on. Additionally, Canaccord Genuity will continue to adjust its long-term incentive plan structure, to better align its compensation strategy with its performance.

The company is acutely aware that it is operating in a new reality. Canaccord Genuity has an outstanding set of assets to draw upon -- a more integrated business model, an established record of delivering world-class ideas and solutions for its clients, ample working capital, and a leadership team that is closely aligned with the company's shareholders through direct investment and a stronger net income focus.

While it reshapes its business to perform in a continuously evolving market environment, Canaccord Genuity will also make careful adjustments to its global brand strategy, to ensure that its corporate identity resonates strongly with current and prospective clients, employees and shareholders.

In any market environment, the company is focused and committed to improving long-term shareholder value. By continuing to strategically reposition its business in this challenging market, Canaccord Genuity is confident that it is well positioned to emerge as the dominant independent mid-market investment bank and wealth management firm, capable of improving its revenues, achieving above-average market share and delivering growing long-term returns for its shareholders.

Access to quarterly results information

Interested investors, the media and others may review this quarterly earnings release and supplementary financial information at the company's website.

Conference call and webcast presentation

Interested parties are invited to listen to Canaccord Genuity's third quarter fiscal 2016 results conference call, via live webcast or a toll-free number. The conference call is scheduled for Friday, Feb. 12, 2016, at 5 a.m. Pacific Time (8 a.m. Eastern Time) (1 p.m. U.K. time) (9 p.m. China Standard Time), and on Feb. 13, 2016, at 12 a.m. Australian Eastern Standard Time. During the call, senior executives will comment on the results, and respond to questions from analysts and institutional investors.

The conference call may be accessed live and archived on a listen-only basis via the Internet at the company's website.

Analysts and institutional investors can call in via telephone at:

• 647-427-7450 (within Toronto);
• 1-888-231-8191 (toll-free in North America);
• 0-800-051-7107 (toll-free from the U.K.);
• 1-800-760-620 (toll-free from Ireland);
• 0-800-917-449 (toll-free from France);
• 0-800-183-0171 (toll-free from Germany);
• 10-800-714-1191 (toll-free from Northern China);
• 10-800-140-1195 (toll-free from Southern China);
• 1-800-287-011 (toll-free from Australia).

Please request to participate in Canaccord Genuity's third quarter 2016 earnings call. If a passcode is requested, please use 14912660.

A replay of the conference call will be available on Feb. 12, 2016, after 8 a.m. Pacific Time (11 a.m. Eastern Time) (4 p.m. U.K. time), and on Feb. 13, 2016, at 12 a.m. China Standard Time (3 a.m. Australian Eastern Standard Time), until April 15, 2016, at 416-849-0833 or 1-855-859-2056, by entering passcode 14912660, followed by the pound key.